How would I solve for net cash flow?I've been stuck on this question for awhile...

Tero Nagu

New member
...now.Please and thank you.? Ghoulish Noise provides the sound effects for Halloween events. Ghoulish Noise commenced operations on October 1, 2005. Information about Ghoulish Noise's balance sheet accounts at September 30, 2006 is summarized as follows:

Balance Sheet information at September 30, 2006
Cash$1,000

Accounts receivable, net of $5,000 Allowance for Uncollectible Accounts (Bad Debts)$49,000

Prepaid Insurance
•for three month policy with coverage effective September 1 – November 30$1,000
Computer and Sound Equipment, cost •acquired on October 1, 2005$36,000

Accumulated Amortization – computer and sound equipment$12,000

|Total Assets$75,000

Advances from Customers for October 2006 events$20,000

Note Payable less Discount
•Ghoulish Noise issued this note to acquire the Computer and sound equipment – the Note, a promise to pay $43,560 on September 30, 2007, was issued on October 1, 2005 to acquire the Computer and Sound Equipment. $39,600

Share Capital
•Sam Scream acquired all the 5,000 common shares of Ghoulish Noise when the corporation was formed October 1, 2005$10,000

Retained Earnings$5,400

Total Liabilities and Shareholder’s Equity$75,000

Cash Receipts for October 2006 were as follows:

Cash collected from customers for events held before October 1, 2006$48,000

Cash collected for October, 2006 performances$80,000

Cash received in advance for an October, 2007 performance$15,000

Cash Disbursements for October 2006 were as follows:

Cash paid for music rights for music used at October events$2,000

Transportation charges paid$4,000

Wages paid$3,000

Dividends declared and paid$60,000

Other Information:
•Ghoulish Noise billed customers $93,000 for October performance: $113,000 for the work done, less $20,000 received in advance.
•Transportation costs of $3,000 are still owed at October 31, 2006
•Wages of $2,500 are still owed to employees at October 31, 2006
•One account receivable for $1,500 was written-off in October
•Cheque #103 paying transportation costs of $4,000 did not clear the bank until November. All other cheques issued and deposits made cleared in October.
•Present value tables are attached at the end of this exam.


1)Based on the information given for Ghoulish Noise, the company should report Net Cash Flow from Operations for October, 2006 of
a)$119,000
b)$59,000
c)$74,000
d)$134,000(I think this is the correct answer)
e)none of the above

My answers keep varying. I'm very puzzled over this question. If someone can help me, that would be highly appreciated. Thanks in advance =)



9.Based on the information given for Ghoulish Noise, the company’s Bank Statement at October 31, 2006 should show a bank account balance of
a)$75,000
b)$74,000
c)*$79,000
d)$123,000
e)none of the above
 
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